Weekly Big Picture : Metal and Auto Stocks Most Affected.

Weekly Action

Nifty, -0.9%; Sensex, -0.3%; Nifty Midcap, -6.9%; Nifty Smallcap, -7.9%; Model Portfolio, 0%.

Market Pulse : Rally Attempt

Weekly Market Review

Nifty, after a gap-up opening, gave up its gains to close flat for the day. The index advanced for the fourth consecutive day. However, due to massive fall on Monday (-12.9%), Nifty declined around 1% for the week.

Barring Nifty IT (+2.1%), all the sectoral indices closed in negative territory for the week. Nifty Metal (-8.3%) and Auto (-8.1%) declined the most.

Tuesday’s session was considered as the day one of an attempted rally as the market closed in positive territory. As Nifty managed to stay above Tuesday’s low of 7,511 for two consecutive days, we changed the market status to a Rally Attempt.

From here, we would prefer to see a follow-through day before shifting the market to a Confirmed Uptrend. Should this occur, the focus will be on ideas that show the best relative strength with good accumulation. Stocks that recover the quickest tend to lead the next run. On the flip side, if Nifty breaches its recent low of 7,511, the market will be moved back to a Downtrend.

It is important to understand that the market selloff has been so sharp and deep that there is a reasonable possibility that we have a sharp bounce like the one witnessed during the week. One should not get deceived by these moves. Instead, wait for the market to show some strength. Sharp, V-shaped recoveries are generally not constructive because most stocks can be hampered by overhead supply issues and that can cause a repulse. We will continue to monitor quality ideas with rising relative strength lines and superior fundamentals that could be set up to buy when and if the market begins to stabilize.

Key News

Coronavirus outbreak update: In India, virus infected cases rose to 775 and death toll increased to 20. Worldwide, cases increased to over 550k and deaths around 25k. Italy (8,215) and Spain (4,858) lead in terms of number of deaths. The U.S. (85,749) took over China (81,340) in terms of the number of infections, according to the Worldometer database.

The RBI cut key interest rates by 75bps to 4.4% and reverse repo by 90bps to 4%. It announced three months of moratorium on all outstanding loans.

The DGCA announced that domestic flights which were initially suspended till March 31 are now suspended till April 14.

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Disclaimer: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. It is for educational purposes only.

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